The Dawn of Digital Switzerlands

The tech behemoths’ role in nation-states is evolving

The biggest US tech companies now have powers which challenge the primacy of governments in many domains. In many cases they also have capabilities not available to nation states. We touched on these issues, and the notion of “corporate foreign policy” in one of the previous issues of my weekly newsletter Exponential View.

Now in the Pennsylvania Law Review, Kristen Eichensehr looks at the issue of Digital Switzerlands in greater depth, 66 pages of it to be precise. We’ve summarized parts of it here. One key distinction between large corporations and nation states is that they lack territory, control of state-violence, and have very different governance mechanisms to nation-states. But that is as true for many supranational bodies as well.

There are similarities between these large platforms and nation-states: in the size of their user bases, which rivals nation-states; their ability to access and influence those user bases; their financial capacity; and their ability to actually impact citizens at scale.

Eichensehr sounds a note of optimism:

The aspirational quasi-sovereign status of the U.S. technology companies [created] two powerful regulators, rather than only one [the nation state], [and] can benefit individuals’ freedom, liberty, and security because sometimes it takes a powerful regulator to challenge and check another powerful regulator.

We’ve already seen a certain amount of this. Technology firms have been helpful in their approach towards cybersecurity. And, arguably, Facebook’s “mark me safe” feature could be helpful in a crisis.

However, the story is not uniformly as straightforward as all that. Look at the complexities facing Facebook, the largest candidate for a Digital Switzerland. Admittedly, its leadership has proven to be muddle-headed as it has been stubborn in confronting its responsibilities but the Swisher interview with Zuck above shows a passable recognition of Facebook’s wider role.

But also, imagine navigating within the complexity of local laws, as well as a firm’s own internal governance systems. We’ve already seen employees from Google convince the firm’s bigwigs to drop certain military contracts. In other words, the big tech firms don’t yet have the internal governance systems or external legal frameworks to consistently engage with us as citizens or nation states.

Where does this leave us? By dint of their execution and by consumer choice, these platforms have incredible power. They will need special status and that status will confer more obligations on them. But the path to that status over the next few years will involve, I suspect, more bilateral negotiations and customised relationships than a single global contract.